What they play for.

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Daily Fantasy Gives the NCAA a Gambling Problem

Kavitha A. Davidson is a former Bloomberg View columnist.
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The four major sports leagues have taken a fairly hypocritical stance on gambling, mostly holding firm in their opposition to widespread legalization while investing huge dollars in daily fantasy sites such as DraftKings and FanDuel. The NCAA finds itself caught in the middle of it all.

As the deluge of ads for these sites continues during broadcasts of pro and college games, the NCAA has issued a stern warning that any player caught betting on college sports, including on daily fantasy sites, will automatically lose a year of eligibility. 

In a statement to Re/code, the NCAA clarified its stance, saying that its schools "have defined sports wagering as putting something at risk -- such as an entry fee -- with the opportunity to win something in return, which includes fantasy league games." That's particularly interesting given the current debate over whether daily fantasy constitutes gambling in the first place. The Unlawful Internet Gambling Enforcement Act of 2006 makes a distinction between illegal, traditional sports gambling such as betting on point spreads, and legal fantasy sites, on the basis that fantasy is a game of skill. But under its own definition, the NCAA clearly considers fantasy to be gambling. It will be interesting to see if the NCAA can convince federal regulators to view things the same way.

We can all probably agree that athletes should not be betting on their own sports. But it seems somewhat of a stretch to ban all college players from wagering on fantasy teams in sports they don't play. As SBNation's Kevin Trahan put it, "If a college fencer wants to spend $3 a week to bet on college football, where's the harm?"

The problem with the NCAA's ban on daily fantasy is pretty much indicative of the overarching problem with the NCAA itself: It's preventing players from something from which it directly benefits. Not only does daily fantasy help ratings, with people tuning into college games they would otherwise have no interest in, but a big chunk of the ad money ends up in the NCAA's coffers.

The Pac-12 Network has announced it will continue accepting ads from DraftKings and FanDuel, as long as those ads only promote professional sports. Broadcast partner ESPN, which owns the SEC Network, is promoting gambling more overtly than ever, giving it increased attention on shows like College GameDay. It went a bit too far at the start of the college football season with its new "cover alerts" -- live, in-game updates on highlights and scoring plays that directly affect the spread. But after just one instance, and more than likely some objection by college officials, ESPN announced it would no longer be issuing cover alerts during games.

Fox Sports led the latest round of funding for DraftKings, investing around $150 million in exchange for an 11-percent share in the company, which has been valued at between $900 million and $1.2 billion. Fox Sports is also a broadcast partner for college football, airing Pac-12 and Big 12 games, and similarly inundates you with DraftKings commercials at nearly every stoppage of play. 

The NCAA is reportedly in talks with its broadcast partners on how to handle such ads, but it doesn't look like daily fantasy is going away anytime soon. The NCAA can't exactly dictate to the networks what kinds of ads they can and can't run -- it's not the NFL. (Even the NFL has eased restrictions on casino ads during games in recent years.) But until a healthy compromise is reached, you can add daily fantasy sports to the laundry list of things college athletes can't do that the NCAA continues to make money off of anyway.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Kavitha A. Davidson at kdavidson19@bloomberg.net

To contact the editor responsible for this story:
Tobin Harshaw at tharshaw@bloomberg.net